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FACTSHEET and Frequently Asked Questions (FAQs) Subject: UK Company Mergers Relevant or Related Legislation: Enterprise Act 2002; Fair Trading Act 1973 Current Position: UK mergers are considered by the competition authorities under the Enterprise Act 2002. Before the commencement of the Act's merger provisions on 20 June 2003, UK mergers were considered under the Fair Trading Act 1973. Key Facts: • The Office of Fair Trading (OFT) investigates all mergers in the first instance and, with the exception of public interest cases, decides whether or not they should be referred to the Competition Commission (CC) for further investigation. The test is whether the OFT believes a merger has resulted or may be expected to result in a substantial lessening of competition. • Where a case is referred, the CC investigates and reports on whether the merger may be expected to result in a substantial lessening of competition. If it does so conclude, the CC decides on what action should be taken to remedy the situation. • The Secretary of State has no role in such cases and any queries should be directed to either the OFT or the CC as appropriate. • For public interest cases, the Secretary of State decides whether to clear a merger, refer it to the CC, or seek undertakings in lieu of reference following receipt of advice from the OFT. Where a case is referred on public interest grounds, the Secretary of State will also decide on remedies (if any) following receipt of the CC report. • The only public interest considerations defined under the Act relate to national security, newspaper mergers and plurality of the media. • Those mergers which were completed, notified to the OFT by means of a statutory merger notice or referred to the CC before 20 June 2003 are considered under the Fair Trading Act. Cases still being considered under this legislation include the four Safeway mergers, Carlton/Granada, Sainsbury/Somerfield and March (Littlewoods)/GUS. Frequently Asked Questions (FAQs) Q1. Which mergers are
considered by the UK competition authorities under the Enterprise Act?
Generally, mergers can only be considered by the UK authorities if the turnover in the UK of the enterprise being taken over exceeds £70m or the merger creates or increases a 25% share in a market for goods or services in the UK or a substantial part of it. For a merger situation raising defined public interest issues, but which falls below the turnover and share of supply tests, the Secretary of State may issue a special intervention notice allowing the competition authorities to consider those issues.
The OFT will invite comments on any public merger situation under review from interested parties by means of an invitation to comment notice. The CC will also invite evidence from all parties likely to have an interest in one of its inquiries. In addition, both bodies will take note of any unsolicited comments that are received. Further details are available at http://www.oft.gov.uk/ and http://www.competition-commission.org.uk/
The Enterprise Act requires the Competition Authorities to publish all of their decisions on public merger cases. An announcement will normally be made through the Regulatory News Service, with a copy placed on the website of the relevant authority.
Further enquiries Further enquiries should be directed to
the Office of Fair Trading (OFT). Information is also available on the following websites:
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